Ex-Goldman Sachs Programmer Seeks End of N.Y. Prosecution

Jan. 18 (Bloomberg) -- A former Goldman Sachs Group Inc.
programmer who won reversal of a federal conviction for stealing
internal code from the bank asked a New York judge to dismiss
state charges against him based on the same allegations.

At a hearing today in New York State Supreme Court in
Manhattan, Kevin Marino, an attorney for Sergey Aleynikov, asked
Justice Ronald Zweibel to dismiss the charges, arguing that
Aleynikov had the right to copy the code and that the charges
are barred by the state’s double-jeopardy statute as well as the
Fifth Amendment of the U.S. Constitution.

Aleynikov, 42, was charged in August by the Manhattan
District Attorney’s Office and indicted the following month on
two counts of unlawful use of scientific material and one count
of unlawful duplication of computer-related material. He has
pleaded not guilty.

“The reality is Sergey Aleynikov has suffered enough,”
Marino said in court. “He has been punished enough.”

Aleynikov, a naturalized U.S. citizen born in Russia, was
freed from federal prison in New Jersey in February after a U.S.
appeals court reversed his December 2010 conviction for stealing
the bank’s trading code, saying the two laws that prosecutors
used to charge Aleynikov -- the National Stolen Property Act and
the Economic Espionage Act -- didn’t apply to his case.

June 2009

Federal prosecutors claimed that, on his last day of work
at New York-based Goldman Sachs in June 2009, Aleynikov uploaded
hundreds of thousands of lines of source code from the firm’s
high-frequency trading system.

Aleynikov, a vice president in the bank’s Global Equities
Division until June 30, 2009, was part of a team responsible for
developing and improving source code related to high-frequency
trading.

New York prosecutors have said that while the federal
appellate judges ruled Aleynikov’s conduct didn’t constitute a
federal crime, they suggested it could be a violation of state
law.

While New York’s statute on previous prosecutions is
broader than the double-jeopardy protection provided by the
state and U.S. constitutions, it isn’t unlimited and the case
falls within one of the rules that allows for successive
prosecutions, prosecutors said in court papers responding to
Marino’s bid to dismiss the case.

Same Acts

U.S. courts have held that a federal prosecution doesn’t
bar a subsequent state prosecution of the same person for the
same acts under the principle of dual sovereignty, prosecutors
said.

New York prosecutors argued that they weren’t a party to
the federal case and had no relationship to anyone who was. They
said the jury and the judges in the federal case found beyond a
reasonable doubt that Aleynikov had misappropriated computer
data and that the prosecution failed only because of elements
irrelevant to the state case.

While Marino argued that the state wouldn’t have prosecuted
the case without the encouragement from the FBI and federal
prosecutors, Aleynikov can’t “seriously suppose” that the
Manhattan District Attorney’s Office would have declined to
prosecute if the victim had contacted it first, according to the
response.

“In every case, the prosecutors rely not on bombast but on
evidence,” Chief Assistant District Attorney Daniel R. Alonso
said in a statement. “The Second Circuit reversed the
defendant’s conviction on federal jurisdictional grounds in the
face of insistent arguments by this same lawyer that the case
was a quintessential state crime. We look forward to proceeding
with the case.”

Broader Scope

President Barack Obama signed a measure on Dec. 28
broadening the scope of the Economic Espionage Act to include
services intended for use in commerce beyond state lines,
including computer source codes.

The 1996 law had applied only to products made specifically
for use in interstate or foreign commerce, such as manufactured
goods. It was broadened to apply to cases such as Aleynikov’s.

Marino said his client has lost his life savings, his
marriage, his home, his job, his reputation and his opportunity
to work in his chosen field. Aleynikov has already served more
than a year in federal prison for the conduct he is being
accused of, Marino said.

“There is a word for this prosecution, your honor,”
Marino said. “It’s inhuman.”

Zweibel adjourned the case until Feb. 15 for a decision,
although the judge said he may rule before then.

The criminal case is New York v. Aleynikov, 04447-2012, New
York State Supreme Court (Manhattan). The New Jersey case is
Aleynikov v. Goldman Sachs Group Inc., 12-cv-05994, U.S.
District Court, District of New Jersey (Newark).